Harry J’s Rs. 4 Billion Sale Runs Into Trouble

• India’s Fortis Healthcare Paid Rs. 4 Billion
• Controversy Surrounds Rs 124 Million Commission Payment
• Distilleries Board Asks For Identity Of 2 Brokers

By Faraz Shauketaly

Business tycoon and Chairman of Distilleries Company of Sri Lanka, Harry Jayawardena did well earlier this month – he sold his company’s near 29% stake in Lanka Hospitals – the former Apollo Hospital – to the Indian healthcare company Fortis. It was a particularly spectacular sale based on the fact that Jayawardena was able to sell the stake at a handsome premium over the prevailing price. The commission payment alone was a staggering Rs. 124 million – or 3% of the sale price of Rs. 4 billion.
Senior executives of Fortis Healthcare arrived early this year, in Sri Lanka using their corporate jet ready to do business.
They were seeking investment in the healthcare sector and were equally keen on meeting with the Minister of Economic Development and the Treasury Secretary, Dr. P.B. Jayasundera. Minister Basil Rajapaksa was not entirely keen on meeting every investor making their way into Sri Lanka and suggested that they meet with the BOI initially and explore the myriad of investment opportunities available in Sri Lanka. Dr. P.B. Jayasundera was not even informed of the Group’s desire to meet him – and for perhaps dubious reasons as it now transpires.
Fortis Healthcare thereafter secured a meeting with the Chairman of Sri Lanka Tourist Board, Nalaka Godahewa, a former member of the Lanka Hospitals Board. Godahewa previously served on the Sri Lanka Insurance Board as Managing Director and previously as its CEO when the company was controlled by Harry Jayawardena connected companies including Distilleries Plc. Executives from Fortis Healthcare then also met with Dilip Jayaweera, a businessman who made his money in advertising.
In a subsequent courtesy call on the Chairman of Lanka Hospitals, Gotabaya Rajapaksa, the Indian Group were told that the Government of Sri Lanka had absolutely no intention of selling any shares that were owned by the State. The government were happy, they were told, to welcome all bona fide investors and where the government also had stakes, the government was committed to good governance and sound business practices. Happily fortified by such a senior personality, the Fortis Group proceeded to look at making an entry into the healthcare sector in Sri Lanka.
Thereafter a meeting and discussions followed with Harry Jayawardena. The Indians were advised to offer an enhanced price (finally agreed at Rs. 62 per share) in order to be certain that their offer was accepted by one of Sri Lanka’s most successful businessmen. The transaction went through on March 4th without a glitch – the price of Rs. 4 Billion successfully meeting with the Harry Jayawardena expectation of a well-honed deal.
The problems started soon after the sale was concluded and duly reported to the Colombo Stock Exchange: Harry Jayawardena routinely asked the board of Distilleries Plc., to approve payment of Rs 124 Million to the two agents. Members of the Board wished to know who the payment was to. Harry J, bound by his own bond with the agents declined to disclose the names. The Distilleries Board, who did not really care who the agents were, merely wanted to know the identity in order that accusations of impropriety would not surface in the future, especially when the auditors made their annual rounds.
The Distilleries Board asked Jayawardena to think of a way in which he would like payment provided of course that the name did not remain anonymous. Whilst there was – and is – no suggestion of any foul play by any of the parties involved, the Distilleries Board did wish to act as appropriately as possible especially when it came to paying out such a significant sum of money.  Members of the Distilleries Plc board were tight lipped as to exactly how their Chairman would assist in securing the agents’ commission of Rs 124 Million.
The Sunday Leader spoke to both Godahewa and Jayaweera: Godahewa categorically denied any involvement saying that the only link to him could be that he once served on the Board of Lanka Hospitals and also reconfirmed that his relationship with Harry Jayawardena precluded him from any involvement with the Distilleries Plc Chief. He described the allegation as a “farce”. For his part Dilip Jayaweera denied any involvement and said , “I am not in the commission business” suggesting that perhaps his name had been erroneously given to this newspaper.